Maybe you are about to move out, and you are going to live on your own for the first time. Or possibly, you were with someone who always took care of paying the bills. There are many reasons why people are not familiar with budgeting. If they never needed to budget for themselves in the past, why would this be something that they know how to do? Below we discuss budgeting 101. We hope to help you learn some of the basics of budgeting so that you can better manage your money.
Budgeting Basics
There are a few basics you need to know about budgeting. First, you need to understand more about fixed and variable expenses, which we will discuss in more detail below. You should also know that when you put together all your fixed and variable expenses, these are your total expenses.
How to Manage Your Budget and Save More Money
You are in the right place if you want to know how to manage your budget and save more money. You can start by familiarizing yourself with what’s known as “The Three R’s of Budgeting.” These three R’s are:
- Reality – How much do I really need this item that I want to buy?
- Restraint – Must I have this now, or can I wait?
- Responsibility – Am I able to purchase this while staying within my budget?
Now that you know the three R’s, you need to know how to use them. This is where setting up a budget comes in – an integral part of budgeting 101.
Setting Up a Budget for the First Time
Don’t get discouraged when setting up a budget for the first time. You might be be surprised to learn that it’s probably much easier than you thought it would be. You can set up a budget in five simple steps.
Step 1 – Define your income – This step must happen before you can determine how much money can be spent on each item. To do this, you need to determine the amount of money you have available. For example, even if you make $52,000 annually, you aren’t bringing home $1,000 per week. There are multiple taxes and other deductions that will come out of your paycheck. The amount left after these amounts are pulled out is how much you have to use, also known as the net amount or your take-home pay. When you set your budget, ensure the amount you are spending (your expenses) doesn’t exceed the amount you have available (your take-home pay or net income.)
Step 2 – Define your expenses – Some expenses will be a fixed or set amount every month. This can include items such as car loans, personal loans, and some other bills. Other expenses will vary each month. These are also known as variable expenses. Some variable expenses include your electricity bill, gas for your car, and how much money you spend on food. You need electricity to live comfortably, gasoline to get to work, and food to give you energy. How much you spend on food, however, can more easily be changed. For example, do you always have to go to restaurants, or can you cook at home more often? This is the step where you must confirm that the money you are making is enough to cover all of your necessary expenses. If it isn’t, you might need to look for a less expensive place to live, you might need to take in a roommate, or you may need to make other adjustments to make it work. You can use the 50-30-20 rule to help you set up your budget.
Step 3 – Define your goals – You already know that setting up a budget helps ensure you have enough money available each month to pay for your required fixed and variable expenses. But you may also be interested in putting some money aside. After all, many expenses can pop up unexpectedly, from your car breaking down to the faucet leaking. Saving for the future or putting aside money can help ensure some extra funds are available for the unexpected.
Step 4 – Track your spending – Now you have defined your income and how much money you have available, plus you have defined your expenses so that you know how much money you will need each month. You have also defined your goals, which hopefully include more than merely paying your bills. Now it’s time to get down to the nitty-gritty. In the same way that people lie to themselves about what they have eaten when trying to lose weight, it’s very easy to lie to yourself about how much you spend monthly. If you want to stay on budget, it’s important to accurately track how much you are spending and where you are spending it. If you don’t seem to have enough funds, are you guilty of discretionary spending? This is spending money on things that you don’t need or can live without, and it is the first place where you should be limiting your budget. By knowing what you are spending, you can make better decisions about any necessary changes to your lifestyle.
Step 5 – Track your progress, rinse, and repeat – Creating a budget often takes longer than one month. You need to make sure you have enough money to pay any necessary bills while having at least a small amount left over so you can do your best to enjoy your life. By tracking your progress and making necessary changes as you go, you will be on a better path to having an ideal budget.
What happens if you don’t have enough money for the fun stuff? Many people don’t realize that there are a variety of activities that you can participate in without spending any money. You can do things such as:
- Visiting zoos or museums when they offer free days
- Walking around a farmer’s market
- Taking a city tour
- Participating in a photography challenge
- Visiting your local library
- Volunteering
Budgeting With MaxLend
Congratulations. Now you better understand budgeting 101. We hope you are ready to set up your budget – or that you have already done this. But what happens if, after creating your budget, you realize you can use a little help? That’s where MaxLend might be able to step in.
Creating a budget isn’t always easy. Staying on budget can be even harder. When you have a few unexpected extra bills thrown in, this can be the hardest. If you need more money to cover something unexpected, MaxLend offers personal installment loans. Sometimes this funding is available as soon as the same day.*
You might need extra money, whether for an unexpected car repair bill, a home emergency, or something that just popped up. There are so many ways to use a cash loan. Maybe you looked into payday loans but realized that you won’t be able to pay one off as quickly as required. That’s why MaxLend makes it easy to apply for cash online and also why we offer an alternative solution to payday loans.
If you have more questions, want to learn more about how it works, or are ready to apply now, contact MaxLend today. Call us at 877-936-4336, and when you take your first loan with us, you’ll automatically be enrolled in our MaxLend Preferred Rewards Program.
Are you interested in finding out what others have to say about MaxLend? You can read some Best Company reviews to see what others have written about us.
*Same Day Funding is available on business days where pre-approval, eSignature of the loan agreement and completion of the confirmation call, if a call is required, have occurred by 11:45 a.m. Eastern Time and a customer elects ACH as payment method. Customers who complete this process by 1:30 p.m. Eastern on business days may still receive funds on the same day, but some banks may not disburse the funds until the next business day. Other restrictions may apply. Certain financial institutions do not support same day funded transactions. When Same Day Funding is not available, funding will occur the next business day.